The DOJ Should Keep Its Historic Role Guarding Competition and Innovation in the Music Business

If you want to play music as part of your business, either live or recorded, chances are you are going to have to pay the two big performing rights organizations. The American Society of Composers and Publishers (ASCAP) and Broadcast Music, Inc. (BMI) license the rights to a lot of music, and without safeguards in place, could easily abuse their position. They’ve done so before. That’s why the Department of Justice should keep up its historic role overseeing those licensing societies.

In June, the DOJ announced that it was reviewing its “consent decrees” with ASCAP and BMI, the two major performance rights organizations. The consent decrees are agreements with the U.S. government. They were originally done in 1941 to settle antitrust lawsuits, and they have been modified several times over the years. The federal district court in Manhattan (the Southern District of New York) has jurisdiction over the consent decrees and has the authority to accept or reject any changes.

These consent decrees impose important limits on ASCAP and BMI’s ability to restrict competition and access to licenses that allow public performances of music compositions. Most importantly, the decrees require ASCAP and BMI to set license fees fairly and to charge uniform fees to similarly situated users. That helps copyright law serve its ultimate goal of spurring creativity and public access to creative works.

Given the importance of the limits the consent decrees impose, EFF joined allies including Public Knowledge, the Consumer Technology Association, and the R Street Institute in voicing its opposition to any changes would chip away at the consent decrees’ protections against anti-competitive conduct by ASCAP or BMI. The consent decrees have become an integral part of the music publishing industry and continue to promote competition. There’s simply no good reason to get rid of these structural mechanisms that allow markets to thrive while limiting opportunities for anti-competitive conduct by dominant firms.

Admittedly, the current music licensing system is not perfect. But nonetheless, the consent decrees are as necessary today as ever. ASCAP and BMI still control over 90% of the licensing market for music performance rights and remain the predominant players wielding tremendous market power. At the same time, music publishers, who own most of the copyrights in musical works that ASCAP and BMI license, have grown more concentrated over the years. The three biggest music publishers now own a majority of the copyrights on popular music.

It might be possible to replace the consent decrees with oversight by the Copyright Office and the Copyright Royalty Board. That would put rate-setting for music performances in the hands of the same body that sets rates for other important copyright licenses, including the licenses for digital audio streaming and cable transmission of broadcast TV channels. But today’s system has important advantages. Today, anyone who wants a license to perform music can challenge the price of those licenses set by ASCAP and BMI by going to the federal court. It’s relatively quick and happens often. The Copyright Royalty Board, in contrast, typically sets rates for each type of license only once every few years. And the Board’s proceedings are not easily accessible to the public, because they tend to operate under blanket protective orders that put a cloak of secrecy over most of the evidence and arguments presented there.

Congress could change all this by moving rate-setting functions to the Royalty Board, while perhaps leaving the DOJ in the role of antitrust watchdog. But that’s not a change that the DOJ can make on its own, and it shouldn’t move to end the consent decrees if Congress doesn’t step in.

It's an odd accident of history that an important part of the creative economy is governed by a 70-year-old court settlement rather than a law or agency regulation. But in practice, the consent decrees that govern ASCAP and BMI work reasonably well and are as necessary as ever.

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